High Court: Medicare Recipients Can Sue HMO

October 12, 2001 (PLANSPONSOR.com) - California
Medicare recipients can sue their HMOs if they are wrongly
denied necessary medical treatment, the US Supreme Court
ruled as the justices tackled the thorny issue of state
liability laws.

In their ruling this week, the justices refused to hear
the HMO claim that the Medicare Act prevents state damage
suits.

The court left intact a ruling by the California Supreme
Court holding that managed care firms can be sued for
damages if they are negligent or deceptive in caring for
their patients.

Lung Transplant

The decision came in the case of George McCall who,
suffering from a lung disease, was allegedly denied a
chance by his HMO doctors to receive a lung transplant –
until it was too late.

His widow sued the HMO, PacifiCare of California, and
its doctors’ group, Greater Newport Physicians, after she
learned her husband could have received a transplant paid
for by Medicare had he not been enrolled in the HMO.

In their appeal, lawyers for the healthcare groups
argued that the ruling would prove “dangerous and
disruptive” if it were allowed to stand.

Trial Ahead

While the suit is now set to go to trial in March next
year, the outcome does not affect employees who want to sue
their HMOs.

Courts have said that separate federal law that governs
pensions and employee benefits bars workers who receive
health care as a benefit from suing for damages in state
court.

Congress is reconsidering that question in the pending
Patients Bill of Rights

Review Board

Medicare pays for health care for 39 million elderly and
disabled persons.

Under the Medicare Act, those who are unhappy with their
level of benefits must complain to a review board
established by the federal agency that administers the
program. They cannot go directly to court and sue for
damages.

Over the last ten years, a growing number of Medicare
recipients have contracted with HMOs to provide their
medical care.

Until recently, it was unclear whether Medicare patients
who were upset by their HMO could sue the managed care firm
for damages, or whether they were barred from doing so by
the Medicare Act itself.

In their May 3 decision, the state justices said
Congress had not barred such lawsuits. Under traditional
state liability law, consumers who are deceived by a
company or are treated negligently are free to sue for
damages.